Mining companies relying more on renewable energy

JOHANNESBURG (miningweekly.com) – Mining companies are increasingly looking to renewable energy to meet their power needs, as the subdued mineral price environment is incentivising firms to reduce reliance on more expensive diesel or distant, unreliable electricity grid systems, states research firm BMI Research.

In its outlook for clean energy use in the mining sector, the firm notes that tightening environmental regulations, compounded by miners' interest in improving their public image, will further accelerate this trend.

“Miners facing ongoing pressure [in this respect] will increasingly look to solar and wind to reduce power costs . . . and integrate renewable-energy sources into their on-site power-generation resources, rather than replace traditional fuels completely, as power supply from wind and solar plants fluctuates depending on the weather, thus requiring backup options,” the company states.

Further, BMI believes that renewable-energy projects in the mining industry will continue to supplement diesel and power sourced from the electricity grid, but only to the extent that it provides cost savings.

“Nonetheless, increasing global environmental awareness and State regulations will provide an additional push for the use of cleaner power in the mining industry,” it says.

In 2014, the cost of electricity from a diesel generator averaged $0.28/kWh to $0.32/kWh, compared with an average of $0.17/kWh and $0.14/kWh for solar and wind, respectively.

Between 2010 and 2015, the levelised cost of photovoltaic solar electricity decreased by 58%, according to the International Renewable Energy Agency (Irena).

Moreover, Irena sees potential for a further 60% reduction by 2025 as a result of growing supply chains and economies of scale, provided that adequate support policies are adopted.

Renewable-energy firms will target miners by offering power purchase agreements (PPAs), which see mining firms face limited upfront costs and fixed yearly fees once the project begins to produce power.

For instance, the $40-million offgrid solar power station and battery storage facility at Sandfire Resources' DeGrussa copper mine, in Western Australia, received financing from developer and operator juwi Renewable Energy, infrastructure and survey solutions company OTOC and French renewables developer Neoen, which will own the facility.

Sandfire has a six-year PPA with upfront costs of less than $1-million. The project became fully operational in June.

An added advantage of powering mines with solar and wind projects is that these plants can often be built close to mine sites, thus cutting the cost of connecting them to the power grid.

Chile's northern region is an example of this, given that it is both isolated and a particularly attractive region for solar power generation, concluded BMI.